Which one of the following assertions is correct (select only one answer per question)?

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BlackTom AI · Accepted Answer

Here is the question and all answer choices to analyze: 
Question: Which one of the following assertions is correct (select only one answer per question)?
Select one:

a. It is not legally possible that a Non-Disclosure Agreement foresees punitive damages in case of breach of this agreement.

b. A Non-Disclosure Agreement and a Letter of Intent are always legally binding documents.

c. A Non-Disclosure Agreement aims to allow the signing parties to disclose sensitive information to any third party.

d. When two parties sign a Letter of Intent, it means that they plan to formalize later their understanding in a legally binding agreement.

Option a: This statement claims punitive damages cannot be foreseen in an NDA. In reality, NDAs can include liquidated damages, penalty clauses, or injunctive remedies depending on jurisdiction and drafting. So this option is overly absolute and inaccurate.

Option b: This says NDAs and LOIs are always legally binding. In practice, NDAs can be binding or non-binding depending on terms; LOIs are often non-binding expressions of intention, though some provisions may be binding. The blanket claim of “always legally binding” is false.

Option c: This asserts NDAs allow disclosure to any third party. The purpose of an NDA is to restrict disclosure to authorized parties and limit who may receive confidential information. Saying it allows disclosure to any third party misrepresents the purpose and function of an NDA.

Option d: This states that signing a Letter of Intent indicates the parties intend to formalize their understanding later in a legally binding agreement. LOIs commonly express intent to negotiate a future contract and may be expressly non-binding, or include binding provisions on certain topics (like confidentiality or exclusivity). Crucially, LOIs are often framed as a stepping stone toward a formal agreement, which matches this statement.

In summary, option d correctly describes the typical and legally accurate relationship between a Letter of Intent and future formal agreements, while options a, b, and c contain overstatements, inaccuracies, or mischaracterizations about the nature of NDAs and LOIs.

Which one of the following assertions is correct (select only one answer per question)?

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